High milk price stimulates milk production in Europe

European farmgate milk prices are currently at very high prices and a production responsive is now detectible.  The LTO Nederlands milk price series put the average European milk price at €37.82 per 100kgs during July.  The European milk price series was last at this level in early 2008, prior to the dairy commodities being affected by the Global Financial Crisis. In the UK milk prices averaged 31.37 pence per litre (ppl) during July 2013.  The DairyCo price series for the UK in July was 19.2% higher than it was at the same time in 2012.  Most dairy companies operating in the UK lifted the price paid to farmers for milk supplied during the months of June or July.  Several companies have made further increases to farm gate milk prices during August or September.   Further increases in UK milk prices are likely.  DairyCo’s Actual Milk Price Equivalent (AMPE) model indicates farmgate milk prices could rise further.  The AMPE calculates a milk price indicator based on returns for skim milk powder (SMP) and butter.  The AMPE for the month of August was 39.5 ppl.  The Ulster Farmers’ Union (UU) recently developed a Milk Price Indicator (MPI) to fill the void left when earlier this year United Dairy Farmers stopped holding their monthly milk auction.  The UFU indicator is based upon a basket of commodities relevant to Northern Ireland dairy processors being: cheese, whey powder, butter, SMP and whole milk powder (WMP).  Like the AMPE the UFU MPI is considered to be a “factory gate” value. The latest price indicator released on September 7, was 34.11 ppl. IFCN has a milk price indicator that is based on global dairy commodity prices.  This indicator is compiled in US dollar denominations and then transferred into Euro terms. In August the IFCN milk pric